Discussion Papers
Innovation and Entrepreneurship Research
Innovation and Entrepreneurship Research
Technology Entry in the Presence of Patent Thickets
(2017). Technology Entry in the Presence of Patent ThicketsNBER Working Paper Series 21455.
We analyze the effect of patent thickets on entry into technology areas by firms in the UK. We
present a model that describes incentives to enter technology areas characterized by varying
technological opportunity, complexity, and the potential for hold-up due to the presence of patent thickets. We show empirically that our measure of patent thickets is associated with a reduction of first time patenting in a given technology area controlling for the level of technological complexity and opportunity. Technological areas characterized by more technological complexity and opportunity, in contrast, see more entry. Our evidence indicates that patent thickets raise entry costs, which leads to less entry into technologies regardless of a firm’s size.